FBI probes tender scandal in South Africa

CAPE TOWN, Dec. 7 (Xinhua) -- The American Federal Bureau of Investigation (FBI) is looking into a tender scandal that has plagued South Africa's social grant payouts in recent months, it was revealed on Friday.

The scandal involves Net1 UEPS company, which is jointly listed on the American Stock Exchange, the Nasdaq and on the Johannesburg Stock Exchange (JSE), according to the Daily Voice, a local news outlet.

In cooperation with the U. S. Department of Justice Criminal Division, the FBI is looking into possible corruption in how that company secured a 10-billion-rand (about 1.15-billion-U.S.-dollar) tender to issue grants in South Africa, the report said.

In the Western Cape, 1.3 million people alone depend on grant payouts every month.

In August, the North Gauteng High Court ruled that the process of awarding the tender was illegal and invalid.

But the court decided that although the process was flawed, cancelling the contract would be disastrous and the social service would collapse.

Taking this into consideration, the South African Social Security Agency was allowed to continue using Net1 through its subsidiary Cash Paymaster Services (CPS), the report said.

If the American investigation is successful, Net1 could be out of business and senior managers could face arrest, according to the report.

The Western Cape government says the issue is out of their hands because the money is paid by the national authority.

Western Cape Social Development spokesperson Samatha Fourie says they also have no idea about the possible payout crisis. "We have not been informed of any developments pertaining to the issue raised," according to the official.